JGB TECHS: (M5) Off Highs, But Underlying Strength Persists

ACGBs (YM +9.0 & XM +10.5) are significantly richer after US tsys rallied strongly on Friday amid a heavy risk-off tone ahead of this week's Trump Tariff "Liberation Day" rollout on April 2, not to mention next Friday's employment data for March.

• The S&P closed 2% lower while treasury yields dropped sharply across the curve. The US 10-year yield closed 11bps lower at 4.25%, having threatened to break out through the top side of the trading range, the previous day.
• Cash ACGBs are 9-10bps richer with the AU-US 10-year yield differential at +11bps.
• Swap rates are 9-10bps lower.
• The bills strip has bull-flattened, with pricing +3 to +10.
• RBA-dated OIS pricing is flat to 9bps softer across meetings today, with April 2026 leading. A 25bp rate cut in April is given a 6% probability, with a cumulative 71bps of easing priced by year-end.
• The focus this week will be on tomorrow's RBA decision after it cut rates 25bp to 4.1%. Given the cautiousness surrounding February's easing, rates are forecast to be on hold.
• Retail sales for February will print just before the RBA decision and are forecasted to rise 0.3% m/m after 0.3%.
• The AOFM plans to sell A$600mn of the 2.25% 21 May 2028 bond today.

USD/JPY tracks near 149.55/60 in latest dealings, down from end Friday levels in the US. Yen was an outperformer through Friday's session as global equity sentiment faltered during the session, led by US markets. Such trends have continued in early dealings today. 

• For USD/JPY technicals, the primary trend direction is unchanged, it remains down and the latest recovery is considered corrective. For bears, the first key support to watch is 148.18, the Mar 20 low. A break would be bearish. On the topside, the pair has pierced resistance at 150.94, the 50-day EMA. A clear break of this EMA would undermine the bearish theme and signal scope for a stronger rally towards 152.70, a Fibonacci retracement.
• The early tone to US equity futures is weaker in the first part of Monday trade. US Eminis are off close to 0.60% after Friday's near 2% cash trading loss. The WSJ noted earlier that the Trump administration is weighing broader/higher tariffs. This comes ahead of Wednesday reciprocal tariff/liberation day announcement.
• US yields finished sharply lower on Friday, the 10 year back to 4.25%, down 11bps on Friday. US-JP yield differentials are rolling back over and sit near March cycle lows.
• Yen is up against the rest of the G10 so far today, particularly NZD and AUD.
• On the local calendar we have Feb preliminary industrial production, along with Feb retail sales. Later on Feb housing starts are out.
• Also note the following option expiry for NY cut later today: Y150.00($868mln). 

TYM5 is 111-14+, +0-08 from closing levels in today's Asia-Pac session. 

• According to MNI’s technicals team, Jun'25 10Y futures have breached initial technical resistance at 110-26 (Mar 25 high). The medium-term trend condition is bullish, the first key resistance is located at 111-17+, the Mar 20 high.
• A strong risk-off tone gathered momentum going into the weekend ahead of this week's Trump Tariff "Liberation Day" rollout on April 2, not to mention Friday's employment data for March. Friday morning's drop in Consumer Sentiment and rising inflation expectations, as reported by the University of Michigan, added to concerns.
• The S&P closed 2% lower while US tsy yields dropped sharply across the curve. The US 10-year yield closed 11bps lower at 4.25%, having threatened to break out through the top side of the trading range, the previous day.
• “US Treasuries have outperformed stocks this quarter, heading for a more than 2% gain, while the equity benchmark S&P 500 fell about 5%. It marks the first time since the onset of the pandemic in March 2020 that stocks fell, and bonds rose in a three-month period.” (per BBG)